Article Summary 1
docx
keyboard_arrow_up
School
Valencia College *
*We aren’t endorsed by this school
Course
2000
Subject
Finance
Date
Apr 3, 2024
Type
docx
Pages
2
Uploaded by Ronald6213
Ronald Ruiz Martinez
FIN 6806-101: Advanced Financial Mgmt
March 30
th
, 2024
FIN 6806-101: Advanced Financial Mgmt
Understanding how to read and analyze a financial statement, manager or investors determine a business profitability, ability to expand a business, or catch problems before they grow. By analyzing the main types of financial statements: The balance sheet, income statement, and the cash flow statement one can analyze how a business is performing and its profitability. The article How to Read (and Analyze) Financial Statements by Bryce Warnes, explains how to analyze a corporation’s financial reports Then, use some basic financial ratios to see how a business is performing.
The author begins the article by analyzing how to interpret a balance sheet, income
statement and cash flow statements. When interpreting a balance sheet, it is crucial to understand
the parts that make up a balance sheet: Assets, liabilities and Owner’s Equity. The article reviews how to read an income statement to determine a corporations financial standing over the reporting period. The income statement calculates net profit utilizing the formula: Gross profit minus operating expenses and taxes also known as the bottom line. The
components of an income statement are: Sales revenue, COGS, Gross profit, General expenses, EBITDA, Income tax expenses and Net profit. When reading a cash flow statement one must remember it is mainly used for small business utilizing accrual method of accounting. At its simple state, a cash flow statement tracks the inflow and outflow of cash, containing the following line items: Cash beginning of period, net income, additions to cash. This article reviewed how to analyze a public business financial statement, which is
Ronald Ruiz Martinez
FIN 6806-101: Advanced Financial Mgmt
March 30
th
, 2024
needed when recreating their financials in module 2. In conclusion, the article gave a brief explanation as to each components that make ups an businesses financial statements and provides a clear financial standing of the business. Work Cited
Misamore, Brian. “How to Price a Bond: An Introduction to Bond Valuation.” Harvard Business School Online , 2 June 2017, online.hbs.edu/blog/post/how-to-price-a-
bond.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Documents
Related Questions
Which dashboard in Business overview shows a quick representation of the financial health of your company?
Select an answer:
Profit and Loss, Expenses, and Bank Accounts
Expense Overview and Balance Sheet
Cash flow management
arrow_forward
Please answer attached question
thanks
arrow_forward
Mastery Problem: Financial Statement Analysis
Question Content Area
Liquidity and Solvency Measures
Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet!
Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.)
arrow_forward
Mastery Problem: Financial Statement Analysis
Liquidity and Solvency Measures
Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet!
Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.)
Liquidity and Solvency Measures
Computations
Working capital
$3,095,000 – $900,000
Current ratio
$3,095,000 ÷ $900,000
Quick ratio
$1,866,000 ÷ $900,000
Accounts receivable turnover
$8,280,000 ÷ [($714,000 + $740,000) ÷ 2]
Number of days' sales in receivables
[($714,000 + $740,000) ÷ 2] ÷ ($8,280,000 ÷ 365)
Inventory turnover
$4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2]
Number of days' sales in inventory…
arrow_forward
Mastery Problem: Financial Statement Analysis
Liquidity and Solvency Measures
Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet!
Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.)
Liquidity and Solvency Measures
Computations
Working capital
$3,095,000 – $860,000
Current ratio
$3,095,000 ÷ $860,000
Quick ratio
$1,866,000 ÷ $860,000
Accounts receivable turnover
$8,250,000 ÷ [($714,000 + $740,000) ÷ 2]
Number of days' sales in receivables
[($714,000 + $740,000) ÷ 2] ÷ ($8,250,000 ÷ 365)
Inventory turnover
$4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2]
Number of days' sales in inventory…
arrow_forward
The Financial Ratios Analysis tools provide an opportunity to...
O impress the accountants
Ogive some confidence about future decisions
Ogive some feedback about decisions made in the past
Oprovide another connection to determining the way a company is achieving its
financial goals
A, B and D
C and D only
arrow_forward
Financial accounting
arrow_forward
What does the DuPont financial system present?
Question 18 options:
financial statements to calculate the liquidity position of a business
financial ratios in a logical way to measure return on total assets
horizontal analysis of the financial statements
financial ratios that are meaningful to suppliers
arrow_forward
1. Using the information in appendix 1 only, comment on the financial performance of the business (briefly consider growth, profitability and credit management)
II. Explain why non-financial information, such as the type shown in appendix 2, is likely to give a better indication of the likely future success of the business than the financial information given in appendix 1.
III. Using the data given in appendix 2, comment on the performance of the business. Include comments on internal business processes, customer knowledge and learning/growth, and provide a concluding comment on the overall performance of the business
arrow_forward
Financial managers must be able to balance current assets and current liabilities to ensure the viability of a business in the short
term. Operating cycles and cash cycles are two short-term areas a financial manager must keep track of in managing a business.
• How are the operating and cash cycles of the firm different?
Why are they important?
arrow_forward
1. Explain the concept of finance.2. How is finance related to other functional areas in a business organization (marketing, production, accounting, etc.)?3. What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.4. Why do you need to understand finance?5. What goal should always motivate the actions of the firm’s financial manager?
arrow_forward
1. Ratio analysis
A company reports accounting data in its financial statements. This data is used for financial analyses that provide insights into a company's strengths,
weaknesses, performance in specific areas, and trends in performance. These analyses are often used to compare a company's performance to that of
its competitors or to its past or expected future performance. Such insight helps managers and analysts improve their decision making.
Consider the following scenario:
You work for a brokerage firm. Your boss asked you to analyze Blue Parrot Manufacturing's performance for the past three years and to
write a report that includes a benchmarking of the company's performance.
Which of the following components would be best for you to include in your financial statement analysis?
A critique of the company's financial statements and a report of any misprints to be sent to the Securities and Exchange Commission
A calculation of financial ratios and an evaluation of the…
arrow_forward
What is the accounting equation and discuss how it impacts on the operations of a business?
2. Why is liquidity critical for a business and how might this affect decision making?
3. Why is investment appraisal important to a business? Use examples to support your reasons.
4. What is meant by relevant costs and critically explain their role in decision making.
5. Discuss the benefits of the information contained in the Income Statement/Profit and Loss Account.
arrow_forward
Financial Statement Analysis tells you if your company is on the right track. Are you growing, making more money? Find out why the Liquidity, Leverage, Profitability, and Cash Flow Ratios are so important to a company's survival? List at least '1' for each category, describing how it is calculated, and what it means.
arrow_forward
In most important business decisions, there are two key financial considerations. Which of the following is the best answer?
Question 23 options:
Risk and return
Profit and loss
Assets and debts
Upside and downside
arrow_forward
How to use the reformulation of financial statements to discuss the firm’s strategy for running the business and generating earnings?
arrow_forward
3. What does the P/E ratio or EPS tell you about a companies’ overall financial condition? 4. What industry statistics can a business use for comparison?5. How can they use that information in their business? Please give a specific example.
arrow_forward
What is the role of the Finance Manager of a company? What is their biggest value to a company? How to Financial managers use Balance Sheet information? How would the finance manager use financial ratios in their job?
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you

Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Related Questions
- Which dashboard in Business overview shows a quick representation of the financial health of your company? Select an answer: Profit and Loss, Expenses, and Bank Accounts Expense Overview and Balance Sheet Cash flow managementarrow_forwardPlease answer attached question thanksarrow_forwardMastery Problem: Financial Statement Analysis Question Content Area Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.)arrow_forward
- Mastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 – $900,000 Current ratio $3,095,000 ÷ $900,000 Quick ratio $1,866,000 ÷ $900,000 Accounts receivable turnover $8,280,000 ÷ [($714,000 + $740,000) ÷ 2] Number of days' sales in receivables [($714,000 + $740,000) ÷ 2] ÷ ($8,280,000 ÷ 365) Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2] Number of days' sales in inventory…arrow_forwardMastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 – $860,000 Current ratio $3,095,000 ÷ $860,000 Quick ratio $1,866,000 ÷ $860,000 Accounts receivable turnover $8,250,000 ÷ [($714,000 + $740,000) ÷ 2] Number of days' sales in receivables [($714,000 + $740,000) ÷ 2] ÷ ($8,250,000 ÷ 365) Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2] Number of days' sales in inventory…arrow_forwardThe Financial Ratios Analysis tools provide an opportunity to... O impress the accountants Ogive some confidence about future decisions Ogive some feedback about decisions made in the past Oprovide another connection to determining the way a company is achieving its financial goals A, B and D C and D onlyarrow_forward
- Financial accountingarrow_forwardWhat does the DuPont financial system present? Question 18 options: financial statements to calculate the liquidity position of a business financial ratios in a logical way to measure return on total assets horizontal analysis of the financial statements financial ratios that are meaningful to suppliersarrow_forward1. Using the information in appendix 1 only, comment on the financial performance of the business (briefly consider growth, profitability and credit management) II. Explain why non-financial information, such as the type shown in appendix 2, is likely to give a better indication of the likely future success of the business than the financial information given in appendix 1. III. Using the data given in appendix 2, comment on the performance of the business. Include comments on internal business processes, customer knowledge and learning/growth, and provide a concluding comment on the overall performance of the businessarrow_forward
- Financial managers must be able to balance current assets and current liabilities to ensure the viability of a business in the short term. Operating cycles and cash cycles are two short-term areas a financial manager must keep track of in managing a business. • How are the operating and cash cycles of the firm different? Why are they important?arrow_forward1. Explain the concept of finance.2. How is finance related to other functional areas in a business organization (marketing, production, accounting, etc.)?3. What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.4. Why do you need to understand finance?5. What goal should always motivate the actions of the firm’s financial manager?arrow_forward1. Ratio analysis A company reports accounting data in its financial statements. This data is used for financial analyses that provide insights into a company's strengths, weaknesses, performance in specific areas, and trends in performance. These analyses are often used to compare a company's performance to that of its competitors or to its past or expected future performance. Such insight helps managers and analysts improve their decision making. Consider the following scenario: You work for a brokerage firm. Your boss asked you to analyze Blue Parrot Manufacturing's performance for the past three years and to write a report that includes a benchmarking of the company's performance. Which of the following components would be best for you to include in your financial statement analysis? A critique of the company's financial statements and a report of any misprints to be sent to the Securities and Exchange Commission A calculation of financial ratios and an evaluation of the…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage

Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage